A budget is a way to get control of your finances. A budget is a plan that identifies how much money you expect and from where; it also lists your expected expenses.


  1. One of the best ways to start a budget is to keep track of where you're spending your money. What are your current expenses?
  2. Identify the minimum necessary expenses.
  3. Calculate your income.
    It may help to separate the "fixed" parts of your income, such as salary, from the "variable" parts, such as bonuses or event-based work. If you work for yourself or are paid on commission, your income can vary widely, so it's harder to figure out what number you should select. For budgeting purposes, it's often good to be conservative -- use the lower income estimates that you can count on. Extra income later on will not hurt as badly as missing income. Add up all the reliable sources of income. It is a good idea to list all the other potential changes to your income including the less reliable sources, such as bonuses.
  4. Consider the big expenses that may be coming your way.
    If you own a house, when will it need a roof? Are you expecting to have children soon? Do you have children, who may have educational or other expenses?
  5. Decide how much you'd like to save.
    Think about what you would like to have money for in the future. Do you want to purchase lots of gifts or expensive ones for the holidays? Do you need or want a new car? Are your considering buying a home? When do you want to retire and what kind of lifestyle do you want then?
  6. Compare your income to your expenses.

Expense categoriesEdit

Some common categories to identify current, necessary and future desired expenses are

Rules of ThumbEdit

Some guidelines or suggestions

  • Housing should not cost more than a third of your regular budget.
  • Save some with every paycheck.
  • Save and have accessible for emergencies a few month's worth of budget.
  • Look at your regular expenses -- are they all necessary?
    • Do you need cable? Would renting movies occasionally be cheaper and more likely to be what you want to watch?
    • Would a less expensive telephone service meet your needs?
    • Could you save electricity by turning off the lights when you leave the room?


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